Biggest winners in Democrats’ plan to forgive $ 50,000 student debt

The Senate’s top Democrat, Chuck Schumer of New York, along with Senator Elizabeth Warren, D-Mass., And other Democratic lawmakers on Thursday introduced a resolution asking the White House for $ 50,000 in student debt for all borrowers by the executive. to forgive authority. action.

“During a time of historical and overlapping crises, which have an excessive impact on communities of color, we must do everything in our power to truly alleviate the American people, lift our struggling economy and reduce the racial prosperity gap. , “Schumer said in a statement.

‘Democrats are committed to big, bold action, and this resolution to cancel federal student loan debt of up to $ 50,000 is one of the strongest steps the president can take to achieve those goals.

The resolution, made for the first time in the Senate last year, was also proposed by Representative Ayanna Pressley, D-Mass., In the House of Representatives. Rep. Ilhan Omar, D-Minn .; and representative Mondaire Jones, DN.Y.

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Although Biden has expressed reluctance to cancel student debt through executive action, and has not included any debt forgiveness in his statement for another $ 1.9 billion incentive package, he is under increasing pressure from members of his own party to action to go over.

Tens of millions of borrowers are also looking for the new president to ease their debt burden. On the campaign, Biden promised to forgive some of their loans. About 3 in 4 Americans support $ 10,000 in forgiveness for student loans, according to the latest College Investor survey.

“We have taken to heart his promise to make it a core priority,” said Nate Wlodarchak, 37, a Denver scientist who studies tuberculosis and owes about $ 12,000.

Here’s who benefits most from the $ 50,000 forgiveness for student loans.

The $ 50,000 cancellation for all borrowers will shrink the country’s outstanding balance on student loans to $ 700 billion from $ 1.7 billion.

The plan would forgive the debt of 80% of federal lenders for student loans, or 36 million people, according to Mark Kantrowitz, an expert in higher education.

To be sure, there are an increasing number of lenders for student loans who owe more than $ 100,000 and will still be sitting with a large balance even after the forgiveness of $ 50,000.

The plan will also not help borrowers with private student loans.

Advocates say the forgiveness of student debt is an important part of any meaningful response to the coronavirus pandemic, pointing out that lenders have already struggled before the crisis.

Indeed, even before nearly a year of record job losses and when the country was in the midst of its longest economic expansion in history, more than 1 in 4 student loan debtors were guilty or deficient.

About 90% of federal student loan borrowers accept the government’s offer to interrupt their monthly payments during the pandemic.

And in a recent Pew survey, 6 out of ten lenders said it would be difficult for them to start paying their student loan bills again.

“Debt cancellation will have a huge impact on those most affected by the coronavirus pandemic: black Americans, older borrowers and recent graduates,” said Alexis Goldstein, a senior policy analyst at Americans for Financial Reform.

Women borrowers will greatly benefit from the proposal.

According to the American Association of University Women, women owe about two-thirds of the outstanding student loan debt in the country.

White lenders for white student loans owe an average of $ 31,300, compared to $ 29,900 for white male lenders. Meanwhile, black female lenders owe an average of $ 37,600, compared to $ 35,700 for black lenders.

Black and Latino Americans would also be one of the biggest winners of the proposal.

Nearly 85% of black bachelor degree recipients carry student debt, compared to 69% of white bachelor degree recipients, according to the Center for Responsible Lending.

About 38% of the black students who entered the university in 2004 failed their student loans within twelve years – a rate that was three times higher than their white counterparts.

An assistant to Senator Warren said the cancellation of student debt should make the greatest progress in narrowing the gap in racial prosperity since the civil rights movement.